Consultants’ practices are dependent on the continuation of the practising consultants who are usually owners and partners in the practices.

One such practice, M, had approached us to plan for the eventual retirement of the founding consultant. It was and is a flourishing practice located in K.L with a large client base. So as to be able to dedicate the later part of his life to social and charity works, Mr T decided to bring in a younger partner, Mr S.

The strategy was to let Mr S own a 10% slice of the business initially. Over the years, Mr T will gradually sell off his shares to Mr S. By setting up an agreement, both of them can come to an understanding annually to sell and purchase a portion of the shares as deemed fit.

In order to ensure the agreement will not fail if he should pass away before the practice is wholly sold off to Mr S, a funding mechanism was included. The simplest and least expensive method was by using Life Insurance Policies. (Sinking Fund would have taken a long time and run the risk of having a Partner pass away before the Sinking Fund Value required is reached).

The arrangement continued over a number of years without any hitch until Mr T suddenly suffered a major illness which required a high risk surgery by specialists followed by months of recuperation. Needless to say, the Practice was able to continue running smoothly with no reason for panic.

After more than half a year, Mr T was able to recover almost completely to continue running the practice albeit more aware of the need to seriously plan for his retirement.

The Agreement continues to provide them with the peace of mind to run their practice and manage the transition seamlessly. Eventually when the Practice is taken over completely by Mr S, he can arrange another partnership agreement of his own. Meanwhile, Mr T can leave the proceeds of the life insurance policy as a legacy to his family.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

PROVIDING A SAFETY NET FOR YOUR RETIREMENT FUND (CS FP08/13)

REAL CASES, REAL PEOPLE

In the mid 90s, one of our clients, Ms LC, a single lady, was diagnosed with brain cancer. As a self-employed consultant, she was forced to give up her business to focus on recovering from her illness.

She had bought a lot of critical illness policies over the years. We helped her to apply for the critical illness benefits. We managed to claim more than RM400,000 from 2 insurance companies for her. This helped in paying for her medical treatments.

After 4 years, the doctor declared that her cancer was in remission. Ms LC decided to set up business again to generate income as the insurance claim proceeds were depleting as treatments were expensive. She found an office and began to renovate the space.

Sadly, just before she could start up her business, the big C came back with a vengeance.

She had to be re-hospitalised. The cancer had now spread to her liver. Due to the shortage of finances, she now had to admit herself into a government hospital for treatment. We also helped her apply to EPF to withdraw her funds from the medical account. At this juncture, we were wondering how she would be able to retire even if she recovers.

After 6 months, she passed away leaving behind her aged mother.

Lessons learnt from this1) Critical illness can deplete us financially as no one knows how much it would cost for treatment.2) As we grow older, the likelihood of contracting a critical illness increases. This may leave our retirement funds vulnerable to such costly treatments. 3) It is important to provide a safety net for our retirement funds.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

LONG TERM DISABILITY INCOME (CS 08/13)

REAL CASES, REAL PEOPLE

Very early on in our career, we met an engaging young gentleman. Mr W, a young graduate, fresh out of college was disabled waist down just 4 months into his 1st job due to a freak accident in the construction site. We visited Mr W, the injured graduate, and were told he had a life insurance policy.After reviewing the policy contract, we informed Mr W and his mother that his life policy will provide him a disability income of 10% of the sum insured until he reaches 65 years old. He was then 24 years old. We remembered his mother uttering at that point of time, “If we had known about this benefit, we would have bought more!” On hindsight, we would all have made better decisions.

We proceeded to help him file his claims with the insurance company. Within a few months the insurance company made the 1st payment. Mr W and his family were relieved as his disability was an added burden. Subsequently, every year Mr W continued to receive the 10% payment upon submission of proof of disability verified by a medical doctor.

While the payment is not sufficient to provide for all his needs, it provided Mr W a supplement to his basic income which he was able to generate while in his wheelchair.

Lessons to learn from this1) When a person is struck by a disability due either to accident or illness, a provision for a regular disability income a welcome relief for long term sustenance.2) No one can predict the future! It is better to be prepared than to regret later.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

A TRAVELLER’S TALE (CS GI02 0910)

REAL CASES, REAL PEOPLE

Planning for a family trip is often an exciting but also stressful exercise. Mr G and his family were planning for such a trip to China at the end of 2009. They would be travelling together with their relatives for the 5 day tour. It was meant to be an enjoyable family bonding trip.

On the day of travel, Mr G and family were informed by the Airlines that the flight was over booked. The family of 4 was re-routed to Spore, enroute to China the next day via a different carrier. As this delay was due to the Airlines oversight, they were compensated for their lodging and meals during their overnight stay in Singapore.The next day, they made the trip to China to rejoin the rest of the group and their relatives. They managed to complete the rest of the tour without further hitches.

As they had the foresight to purchase a Travel PA while planning for their trip, on their return they informed WA of their ordeal. We assisted Mr G and family to file a claim with the Travel Insurer. Upon the submission of the claim form and other supporting documents from the Airlines, the claim was processed. Each family member was compensated with a certain amount of money in addition to the compensatory payment by the Airlines.

Invaluable lessonIt always pays to cover your bases even if you are planning family excursions. Unforeseen circumstances can occur even in best-laid plans.

A Travel PA is a very small-added price to pay for peace of mind. The Travel PA not only covers delays and loss of baggages, it also provides accident cover and medical compensations as well as repatriation.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

THE TRAGEDY OF IT ALL! (CS CL01 0810)

REAL CASES, REAL PEOPLE

Most insurance death claims are due to natural causes or accidents. But when it happens tragically by one’s own hand, the period the policy was inforced is important to determine the admissibility of the claims. In December 2008, Mdm P, a businesswoman in her early 40’s, applied for MRTA policy to cover a housing loan of less than RM200,000. Prior to this, she had 2 other policies: one to cover another housing loan taken more than 5 years ago and the other a life policy taken in 2008.

Unfortunately, 6 months later due to some family issues she took her own life by consuming poison. The family could not save her even after sending her to the hospital.

We then had the unenviable task of informing family of the deceased in Sept. 2009 that life policies do not cover suicides that occur within 365 days of commencement of policy. An agent from another company which also provided a life policy cover less than 12 months prior to death was also informed. We then began the claims process commencing with the submission of relevant documents.

Suicide cases are slightly more complicated. Besides normal documents like claim form, proof of identity, doctor’s report and death certificate, others such as police report, newspaper cuttings, post mortem report and other special reports are mandatory.

A couple of months elapsed after submission of documents following which the policy in force for more than 5 years was paid directly to the bank. After deducting the outstanding loans, the residue of the death proceeds was paid to the estate of the deceased as there was no Will.

Unfortunately, the other 2 policies which were in force less than 365 days become void. Currently, the case is still pending subject to further technical reports from the police in order for the insurers to proceed with refund of the premiums.

What can we learn from this case?

1. Life insurance companies do not cover suicides (death by own hand) within the first 365 days of commencement of cover or reinstatement whichever is later.2. Where the proceeds is non claimable as in the suicide case, the premiums are usually refundable.3. Policies which are kept in force for more than a year are definitely claimable subject to absence of fraud.

For these reasons, we advise that policies in force should never be allowed to lapse or be replaced unless in rare cases or exceptional circumstances. The suicide conditions would start all over again from the reinstatement date or date of replacement of policy. Policyholders may lose out on claims should such situations arise.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

THE ADOPTED FILIAL CHILD (CS CI02 0610)

REAL CASES, REAL PEOPLE

It’s often not easy for most people to accept the concept of life insurance. But by advising the prospect to ‘adopt a child’ had helped secure a family’s needs in their darkest hour.

We approached Mr L, a 30-year old architect approached in 1992. The newly-married professional with an expectant wife, and just starting out on his career was hesitant about purchasing a policy initially due to mounting financial commitments.

We then suggested he ‘adopt a child’ instead. He was curious as to why we would suggest this. Parents provide for their children’s needs, till the children reach adulthood, but children are not duty bound to care for them in their old age. In this case, the ‘adopted child’ will take over the responsibility. Just like a filial child, the life insurance performs the same role, where the “child”, which is the insurance policy, will provide the parent (the policyholder) a retirement income after being dependent on the parent for say 20 years.

Life insurance is about preserving the dignity of the family should they lose the breadwinner.

Convinced, Mr L subsequently bought a RM100,000 life insurance policy to cover any eventualities of untimely death. Over the years, he bought a few more policies with the coming of 2 other children.

After paying for 7-8 years, Mr L decided to temporarily stop paying for the policies as he was setting up his own architectural practice. He never continued paying for the insurance policies and some of the policies eventually lapsed.

In 2009, Mr L was diagnosed with liver cirrhosis. Initially, he was very optimistic and underwent treatment for his illness. During this time, we met up with him to review his policies. Even though most of his policies had lapsed, the first one he bought for RM100,000 was still in force. We advised him to make a payment to ensure that this policy will not lapse, which he did.

We also advised Mr L on estate planning by setting up a will. A few months later, his condition worsened. He was hospitalised in a government hospital and subsequently passed away 3 days later in mid November 2009.

We went on to process the insurance claim which was paid out in less than 2 weeks! Life insurance proceeds are paid according to the Life Insurance Act and do not need an Letter of Administration or Grant of Probate if proper nominations are made. This was the family’s only source of income for the time being as Mrs L is a housewife. At the same time, we helped to process the Will. Mrs L received the Grant of Probate in January 2010 which was unusually fast. Even her family was very surprised.

The insurance monies from the claim were instrumental in helping the family tide over their financial necessities while awaiting the EPF monies and sorting out the rest of the estate. The insurance monies played the role of “Filial Child” in providing the family with relief at the time it was needed most. The Will had helped to expedite the release of the assets which would otherwise have taken years to unfold.

A few lessons can be learned here. Advisers or agents should be creative in explaining the importance of having an insurance policy to clients. Never give up on a client but explain clearly the dire consequences of allowing policies to lapse. Above all, make sure we honour our commitment to clients especially when they are no longer around.

In retrospect, our efforts have been fruitful and we derive a sense of satisfaction to see the family of Mr L slowly putting their lives back to normalcy.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

JUST A STROKE OF LUCK? (CS CI01 0110)

REAL CASES, REAL PEOPLE

Nothing can prepare us for what is to come but with foresight and planning, the future can be made less daunting. Take the case of Mdm SF who works with her mechanic husband in the Klang Valley. She had invested in a few whole life policies since 1994 and under our advice she took up a critical illness (CI) policy in 2000. Due to weight and health considerations, she had to undergo numerous medical tests and despite having to pay a higher premium, she was fully committed when her policy was approved 5 months later. This decision was to have a major impact on her life.

The Unexpected HappensIn 2007 she suffered a stroke (multiple intracranial stenosis at basal region) that left her semi-paralysed. She subsequently contracted diabetes. Things looked bleak and hopeless especially since she had to seek treatment from 3 different hospitals! Many would have felt devastated given the circumstances.

Wings to the AssistAt this juncture, we stepped in to help by making the claims for hospitalization, medical expenses as well as for critical illness. It was a tedious process as claim reports had to be retrieved from all the 3 hospitals that she was receiving treatment from. It was only in 2008 that the CI claims was finally paid, the delay being due in part to the numerous medical reports, and a waiting period for stroke claims.

Going the Extra MileMdm SF had a smaller CI policy from another insurer but was advised by the agent not to make claim so as to retain the benefits attached to the policy. We, however, with her consent, sought the advice of the insurer directly, collected the claim form and submitted it on her behalf, in effect starting the process all over again. She received her payment in mid 2009 thus saving future premiums. With the critical illness waiver of premium, the rest of the benefits remain intact. She has since recovered sufficiently to resume work.

Invaluable LessonsThe above case clearly illustrates not just the importance of investing in insurance but the kind of policies as well. Everyone should have medical (hospitalization and surgical) and critical illness policies. CI provides lump sum proceeds which can allow the insured to seek other treatment as in the case of Mdm SF who is now being attended by traditional doctors and acupuncturists.

It is important to seek proper advice and service support as clients will need help in various areas especially in the claims process. Questions to ponder: What if the client decided not to seek advice to pursue the complicated process? What if she had concurred with the advice given by the agent not to proceed with the second claim? Would she have to continue paying for the other policy?

By taking the initiative, we made a difference. The encouragement and support gave Mdm SF hope while the delivery on the promise provided a lifeline to the future. On a happier note, Mdm SF need not continue making the annual premium payment and she can use the money saved to provide more cover for her husband who is the breadwinner of the family.

Lastly, nothing can substitute for staying healthy because health is wealth.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.

BUYER BEWARE! (CS BG01 0110)

REAL CASES, REAL PEOPLE

One of the often quoted statements about the insurance industry is that clients do not know what they are actually buying, do not ask the right questions or read the fine print and often pay the consequences for it. The case of Mr. W who runs a hardware shop in Klang is a classic example.

Covered yet Uncovered

He purchased a burglary policy a few years ago from a relative’s friend making it clear that it had to be cheap. Thinking he had done the right thing and getting a good bargain in the process, he went about his business without giving the matter a second thought. Unfortunately, there was a holdup in his shop. Thanking his lucky stars for his burglary policy, he submitted a claim for it. Imagine his shock and disbelief when told it was not admissible! Preposterous, how could that be?

Waking up to Reality

In his despair, Mr. W turned to WINGS Alliance to shed some light into the matter. Upon going into the details of the policy, we discovered wherein the fault lies. A normal burglary policy provides coverage due to loss by theft accompanied by actual forcible and violent entry and/or exit of building. A holdup does not fall into the clause stipulated. It explained why the premium was cheaper than other quotes. Unfortunately, our hands were tied by the exclusion clause and we had the unenviable duty to inform Mr. W that he had to accept the fact that he would not be compensated.

Who is to Blame?

If we want to apportion blame, both parties are at fault here: the client for insisting on buying ‘çheap’ and the agent for acceding to his request without explaining what cheap means. That made both parties happy. Fine if nothing happens but disastrous when something does. In this instance, something did!

Help Yourself

Never make the mistake of thinking cheap is better. A higher premium may seem excessive but you will be grateful for it if something untoward happen and you find yourself covered and protected. You owe it to yourself to find out more details (check the Burglary Notes at Info Bank). And, of course, it pays to read and understand what your policy says to avoid the unusual circumstances that Mr. W found himself. The onus, after all, is on you to be informed and in the know about the policy you are buying.

This document shall not be reproduced either in part or otherwise without prior written consent of the writer. The opinions and information contained herein are based on available information believed to be reliable although the writer does not make any representation as to its accuracy or completeness and the opinions are subject to change without any notice. No reliance upon statements whether expressly or implicitly, directly or indirectly, from the information in the documents by anyone shall give rise to any claim whatsoever against the writer, its associates, directors and employees. The writer and/or its associated persons may from time to time have an interest in the products and services mentioned in the document. If this document is distributed via electronic transmission, then such transmission cannot be guaranteed to be secured or error-free. The sender therefore does not accept any liabilities or whatsoever for any errors or omissions in the contents of this document.